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1996 – Going Global

SCI concentrated its first international locations on the U.S.-Mexico border in towns such as Tijuana.

SCI headquartered its team in Monterrey, Mexico, and quickly acquired two distribution facilities at Parque Industrial Monterrey, just five minutes away from the international airport.

One of the advantages of building the first national industrial real estate company in the United States was the depth of relationships that Prologis legacy company SCI formed with clients. Whereas a typical real estate company might be relegated to speaking with regional real estate managers, the conversations between SCI and its clients often took place with CEOs, CFOs and other corporate leaders.

During the mid-1990s, many conversations involved Mexico, specifically about capitalizing on the North American Free Trade Agreement (NAFTA) and the burgeoning maquiladora program. The program allowed companies to import materials duty free into Mexico, process them and then export them for distribution.

Many executives wanted to lease space in Mexico but found a shortage of high-quality warehouse spaces. SCI, with its roots in the Southwest, saw entry into Mexico as the first step toward becoming a global company.

SCI focused on developing new facilities in border cities, like Juarez and Tijuana, due to a high percentage of English-speaking workers and short commutes over the border to monitor construction.

With the headquarters of its Mexico operations in Monterrey, SCI assembled a team that blended talent from its own ranks with local partners in Mexico.

“We believed that if we brought a few high-quality people into the international locations, it could really help to propel the business,” said Ed Nekritz, Prologis chief legal officer and general counsel. “We wanted to ensure that the teams on the ground, who ultimately were running it day to day, were fully part of our company’s culture and way of doing things.”

By building Class-A distribution centers that could easily be converted into manufacturing facilities, the company expanded its client base. When customers signed a lease, they were allowed to convert the space into a manufacturing plant as long as they changed it back into a distribution space when the lease expired.

“Mexico was the perfect place for us to dip our toes into the water,” said Walt Rakowich, then the senior vice president and director of the mid-Atlantic region. “It truly turned out to be a home run. We made a lot of money, and over time, it provided us the confidence to expand our reach even further.”